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Honda slashes forecast on China territorial spat

TOKYO: Honda Motor shares tumbled last week after the Japanese carmaker warned that its full-year results would be much weaker than forecast, as a trade dispute between Tokyo and Beijing dents sales.


Investors dumped the shares, which fell 4.65 percent by the close in Tokyo, on news that the maker of the Accord and Civic would report an annual profit that was 20-percent lower than previously expected—even as its first-half profit more than doubled to $2.7 billion.

Honda’s stock was down 6 percent in earlier trade after it mistakenly released earnings three hours ahead of schedule due to a “human error.” Blaming a strong yen and weakening sales, Japan’s third-biggest carmaker said it now expects to earn $4.7 billion in its fiscal year to March 2013.

A Honda statement did not offer details about the Japan-China spat but company officials told a press conference in Tokyo last week that the firm was cutting its full-year sales forecast in China to 620,000 vehicles, down from 750,000 units. The diplomatic dispute over an East China Sea island chain, which has slammed the brakes on sales of Japan-brand cars in China, the world’s biggest car market, was expected to weigh on demand until February, they said.

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